Shipping costs could lead China’s iron ore importers to pool charges
China's steel and iron association is encouraging smaller steel-producing companies who import iron ore from Brazil to pool escalating shipping charges.
According to a report Sunday in the China Daily, shipping cost have risen $10 per ton to about $88 in recent weeks for iron ore from Brazil to China, hitting particularly hard the small shippers who haven't locked in forward contracts.
'As many large domestic companies such as Baosteel have already negotiated forward shipping contracts for 2007, it was the small companies that bore the brunt of the sudden rise in shipping charges,' the report said.
So the steel and iron association is urging domestic companies affected by the higher rates to pool shipping charges.
Some say the higher rates are being driven not just by demand for the actual iron ore, but by a systematic push from the world's largest iron ore manufacturers to buy up extra shipping capacity to keep demand high. Whatever the reason, Chinese domestic steel producers are now sure the price will reach $100 per ton soon, the report said.